Santosh Starch Product Ltd., Ahmedabad V. The ACIT.,(OSD)Circle-8, Ahmedabad

ITA 1205/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9743 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAGENDRA SINGH
• Keywords: Earning of tax free income; Proportionate interest
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SANTOSH STARCH PRODUCT LTD, 201, KARMA COMPLEX, NEAR MAHALAXMI CHAR RASTA, PALDI, AHMEDABAD - 380007 PAN: AADCS0483R (APPELLANT) VS THE ASST. COMMISSIONER OF INCOME TAX (OSD), CIRCLE - 8, AHMEDABAD (RESPONDENT) REVENU E BY : S H RI NAGENDRA SINGH , SR. D . R. ASSESSEE BY: S H RI GAURAV NAHTA , A.R. DATE OF HEARING : 29 - 12 - 2 015 DATE OF PRONOUNCEMENT : 20 - 01 - 2 016 / O RDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 200 8 - 09 , AR ISES FROM ORDER OF THE CIT(A) - XIV, AHMEDABAD DATED 11 - 04 - 2012 IN APPEAL NO. CIT(A) - X IV/ AC. CIR. 8/129/ 10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT , 1961; IN SHORT THE ACT . I T A NO . 1205 / A HD/20 12 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 1205/AHD/2012 A.Y. 2008 - 09 PAGE NO SANTOSH STARCH PRODUCT LTD VS. ACIT 2 2. THE ASSESSEE S SOLE SUBSTANTIVE GROUND CHALLENGES THE LOWER AP PELLATE ORDER CONFIRMING SECTION 14A DISALLOWANCE OF PROPORTIONATE INTEREST UNDER RULE 8D(2)(II) OF RS. 5,07,734/ - AND THAT OF ADMINISTRATIVE EXPENDITURE @ 0 .5 % OF AVERAGE VALUE OF INVESTMENT COMING TO R S. 74,637/ - ; TOTALING TO RS. 5,82,371/ - AS MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 30 - 11 - 2010. THERE IS NO DISPUTE ON FACTS OF THE CASE. THE ASSESSEE DECLARED EXEMPT INCOME FROM DIVIDENDS OF RS. 10,23,035/ - AND LONG TERM CAPITAL GAINS OF RS. 15,73,595/ - TOTALING TO RS. 25,96,630/ - . ITS TAX FREE INVESTMENT IN RELEVANT PREVIOUS YEAR READ A FIGURE OF RS. 1,52,2461/ - IN SHARES OF LISTED COMPANIES AS ON 31 - 03 - 2008. THE ASSESSING OFFICER INVOKED RUL E 8D OF THE INCOME TAX R ULES FOR M AKING THE IMPUGNED DISALLOWANC E. THE ASSESSE E INTER A LIA ARGUED IN COURSE OF LOWER APPELLATE PROCEEDING THAT ITS INTEREST FREE FUNDS ARE MUCH MORE THAN THE IMPUGNED TAX FREE INVESTMENTS. THE CIT(A) UPHOLDS ASSESSING OFFI CER S ACTION WITHOUT SPECIFICALLY DISPELLING ABOVE STATED PLEA. 3. WE HAVE HEARD BOTH PARTIES. CASE FILE PERUSED . THE ASSESSEE REITERATE S HIS ARGUMENT AS TENDERED IN LOWER APPELLATE PROCEEDINGS THAT ITS TAX FREE INVESTMENT ARE THAT LESS THAN INTERE ST FREE FUNDS. WE FIND FROM ITS BALANCE SHEET THAT THE SAID NON - INTEREST BEARING FUNDS IN THE NATURE OF SHARE CAPITAL AND RESERVES/SURPLUS AGGREGATE TO RS . 1,98,94,943/ - . THE REVENUE IS UNABLE TO REBUT THIS FACT. WE ACCORDINGLY HOLD THAT A PRESUMPTION C AN SAFELY BE DRAWN THAT THE IMPUGNED TAX FREE INVESTMENT S HAVE BEEN MADE FROM THE SAID INTEREST FREE FUNDS AS PER HON BLE BOMBAY HIGH COURT DECISION IN CIT I.T.A NO. 1205/AHD/2012 A.Y. 2008 - 09 PAGE NO SANTOSH STARCH PRODUCT LTD VS. ACIT 3 VS. RELIANCE POWER AND UTILITY 313 ITR 340. THERE I S NO DISTINCTION ON FACTS OR LAW POINTED OUT BEF ORE US. WE ACCORDINGLY AGREE WITH ASSESSEE S CONTENTION TO DELETE PROPORTIONATE INTEREST DISALLOWANCE OF RS . 5,07,734/ - (SUPRA). COMING TO ADMINISTRAT IVE DISALLOWANCE EXPENDITURE (SU P R A), THERE CAN HARDLY BE ANY DISPUTE THAT RULE 8D APPLIES FROM THE IM PUG NED ASSESSMENT YEAR 2008 - 09. THIS DISALLOWANCE COMPONENT IS ACCORDINGLY UPHELD. THE ASSESSEE S SOLE SUBSTANTIVE GROUND IS PARTLY ACCEPTED. 4. THIS ASSESSEE S APPEAL IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 20 - 01 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 20 /01/2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,